“One customer, well taken care of, could be more valuable than $10 000 worth of advertising.” — Jim Rohn
Phillip Chichoni
The first time it happened, it was purely an accident. Tich got a call from an old client who had been away for a few years. The client wanted a certain service rather quickly and asked Tich if he knew anybody who could deliver. Incidentally, Tich happened to supply that service, although this former client did not know that.
When they discussed the pricing terms, the client found them favourable and gave Tich the job. The delivery period was normally two weeks. However, Tich managed to complete the job in one week and asked the client to come and collect the documents. The client was not only happily surprised by the early delivery, he was also quite impressed by the quality of the work and thanked Tich for a job well done.
After a couple of weeks, Tich received a call from the client.
“Hey Tich,” he said, “I have a friend who needs the same service you provided to me last time. I have given them your number, so you can expect their call later today.”
Within a few minutes another call came. “Hello Tich, my name is Steven. I have been referred to you by Mike [the old client]. He said you provide this service for $400?”
“That is right sir,” replied Tich.
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“Okay. Can I come and see you right away?”
That is how Tich got his first referral client. Within three months, Tich started getting dozens of clients from the original old client, as well as the new clients who would have been happy with his service. Now Tich gets around 80% of his new clients from referrals alone.
Are you making use of the power of referrals to get more customers? If you are not, you are missing on one of the most effective ways of getting customers at a low cost. Here are some facts about the effectiveness of referrals: *65% of new business comes from referrals — New York Times *92% of respondents trusted referrals from people they knew — Nielsen *People are four times more likely to buy when referred by a friend — Nielsen
Those are the statistics. Now imagine this scenario. You have 10 customers and each of them refers one of their friends to buy your product or service. You would have doubled your customers and sales.
Referrals do not just happen, as it did in Tich’s case. You need to do things that will bring in referrals. It starts with your product or service. Is your offering so good that it leaves customers impressed? How about your service? If both are not superior, you will have a hard time convincing customers to refer their friends. In fact, customers will be embarrassed to refer their friends if your product or service is poor, or if you offer shoddy customer service. How many times have you heard people bad-mouthing certain companies for bad service or poor quality products? People will tell all their friends about bad service and word can easily spread.
The second issue is about trust. To a customer, when they are buying anything, they are taking a risk. Thoughts would be going through their minds: “What if the product does not work as it is supposed to? What if the supplier is a crook? What if the business person is a fly by night outfit who will disappear with my money? What if they fail to deliver as promised?”
Removing the risk factor is the remedy for clients’ fears. There is no better way to remove fear than a recommendation from a trusted friend who is happy with a supplier’s product. As you know, people do business with people they know, like and trust. It is rare for a person to like and trust you at first sight. However, a good word from a friend can quickly build that trust.
Rather than waiting for happy customers to refer your service to their friends, take the initiative and make it easy for them to do so. You can ask them to tell their friends about you. You can make it even more attractive by giving them an incentive to make referrals for you. Why not offer them a reward as a token of appreciation? The reward does not have to be money. It could be a gift, such as a ticket to a show or a sporting event. You could give them a discount on future purchases if they refer clients.
Tich no longer waits for clients to refer their friends by accident. He actively encourages them to do so and his list of referrals keeps on growing.
You can copy his example by applying the three principles we have covered today: ensure your offering is exceptional with service beyond customers’ expectations; stick to your promises, or better still, deliver; and finally, start actively encouraging customers to make referrals.
Until next week, keep on accelerating your growth. — www.referralsaasquatch.com
Phillip Chichoni is a business development consultant who works with SMEs and entrepreneurs. You may contact him by email, [email protected]. You can also visit http://smebusinesslink.com
